Stocks turned lower after producer price data came out hotter than expected, disappointing investors who were hoping for signs of easing inflation ahead of next week’s Federal Reserve meeting.
The Standard & Poor’s 500 It was down 0.7% on Friday as of 4pm EST after fluctuating for most of the day, while the Dow Jones Industrial Average was down 0.9%, about 305 points. The technology-focused Nasdaq Composite fell 0.7%.
Data releases over the past week It was a reminder How difficult it will be to determine when to ease inflation, which will allow the Fed to pump the brakes on its tightening policy. Investors had hoped Friday’s inflation reading would provide evidence that price pressures in the US are easing and help anchor a smaller rate hike next week.
All three major US indices ended the week with losses, snapping a two-week winning streak. The S&P 500 fell 3.4% for the week.
The Federal Reserve will do The next interest rate decision On Wednesday, the PPI data – along with Tuesday’s consumer price data – is expected to significantly influence the path of interest rates over the coming months.
In recent days, investors are increasingly concerned that high inflation will force the Fed to continue raising interest rates levels higher than previously expectedwhich could push the US economy into recession.
“Even though the market sometimes seems to ignore Powell, believing him to be a fraud, he continues to assert that he would put this economy into a recession if he had to,” said Eric Sterner, referring to Federal Reserve Chairman Jerome Powell.
Mr. Sterner, chief investment officer of Apollon Wealth Management, said he expects markets to retest recent lows in the first and second quarters of next year.
“We’re stuck in this rut right now waiting for inflation to return to normal and it could take the whole next year for that to happen,” he said.
These concerns about how interest rates will rise – and how they will affect the economy – have led to volatile trading in US stocks recently and March interrupter that started in October. All three major US indices are on track to end the week with losses, snapping a two-week winning streak. As of Friday afternoon, the S&P 500 is down 3.1% for the week.
“Markets are very sensitive to this at the moment,” said Susannah Streeter, chief investment and market analyst at The Financial Times.
“While excessive price hikes may be in the rear-view mirror, it is about how long incremental rate increases will last, which is why these twin evils loom large: recession and high inflation. That is the real concern – that we will have on the stagflation scenario.
The producer price index, which measures what suppliers charge businesses and other customers, It rose 0.3% in November Compared to the previous month, the Labor Department said Friday morning, the same as October’s revised increase of 0.3%. Economists polled by The Wall Street Journal was expected Prices for US suppliers will rise 0.2% for the month of November.
In recent months, massive market moves have followed the release of consumer inflation data.
“When the CPI comes in a little bit higher or a little bit lower, you get a huge market move,” said Brandon Pizuru, director of public investments at GuideStone Capital Management. “Those of us who are positioned defensively will either really benefit next Tuesday and Wednesday, or feel some pain in the short term if he starts this Santa Claus rally.”
Yields on government bonds rose, with the 10-year US Treasury yield rising to 3.567% from 3.492% on Thursday. The yield on the two-year note, which is more sensitive to near-term interest rate expectations, rose to 4.328%. Yields rise when bond prices fall.
Brent crude, the international benchmark for oil prices, fell 0.1% to $76.10 a barrel, extending its losing streak to seven consecutive sessions, the longest since August 2021. Oil prices has been declining lately Amid fears that slowing economic growth will hinder demand for fuel. Both Brent and its US counterpart WTI – both of which have reached highs this year – are trading lower year on year.
In China, major indexes jumped amid a sharp rise in real estate stocks. Hong Kong’s Hang Seng Index rose 2.3%. In China, the Shanghai Composite added 0.3%, helping it post its sixth consecutive week of gains. Japan’s Nikkei 225 rose 1.2%.
In Europe, the continental Stoxx Europe 600 index rose 0.8%.
Write to Caitlin McCabe at [email protected] and Jack Pitcher at [email protected]
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